Strong rentals, real-estate sales boost Robinsons Land profits

BY RUBY ANNE M. RUBIO, BusinessWorld Reporter Robinsons Land Corp. profits grew 27.75% in the first quarter ending December to P418.96 million from P327.96 million on strong rental income and real-estate sales. Gross revenues rose 37.6% to P1.72 billion from P1.25 billion due to improvement in the real-estate business and hotel operations. Real-estate revenues churned in P1.5 billion, up from P1.13 billion. Frederick D. Go, executive vice-president and group general manager, said "the strategic initiative we made across four business units has translated to improved profitability." "The company flagship malls, Robinsons Galleria and Robinsons Place Manila, continue to enjoy excellent rental income, while newer malls Robinsons Place Pioneer and Robinsons Place Angeles and the redeveloped Robinsons Place Novaliches are also contributing significantly to the rental growth," Robinsons Land said. Its high-rise buildings division saw an 83.97% growth in revenues to P526.7 million from P286.3 million due to realized revenues from residential condominium projects, particularly the One Gateway Place, a middle-cost residential condominium building in Pioneer Street, Mandaluyong, and the One Adriatico Place along Adriatico Street in Malate. Its office buildings including the newly opened Cybergate Center in the Pioneer Complex, are enjoying almost full occupancy. Rental income from these buildings grew 38.84% to P79 million from P56.9 million. Strong reception to the opening of the Crown Plaza Hotel led to an 87.76% increase in gross revenues from the hotel division to P219.3 million from P116.8 million. Robinsons Land said "Holiday-Inn Galleria Manila remained steady, while the Cebu Midtown Hotel and Robinsons Apartelle in Mandaluyong registered revenue growth of 24% and 50%, respectively. The company continues to renovate the hotel rooms and facilities on a regular basis. The company’s housing and land development division, through its two housing subsidiaries, Robinsons Homes, Inc. and Trion Homes Development Corp., posted realized revenues amounting to P101.3 million, 57% higher from P64.5 million." New projects such as Bloom-fields Tagaytay, Bloomfields Davao, and Robinsons Residenza Milano in Batangas are also well-received. The division is seeking several joint ventures in key provinces to further expand its growth. Cost and expenses climbed 32.53% to P1.1 billion from P828.82 million. As a result of higher marketing and selling expenses of its high-rise division, general and administrative expenses rose 30.66% to P289.77 million from P221.77 million. While interest income fell 58.94% to P25.39 million this year from P61.83 million last year, since the initial adoption of new accounting rules entails higher level of interest-bearing principal compared to previous years. After the successful primary and secondary share sale of sister firm Universal Robina Corp., Robinsons Land is mulling to increase its free float to 40% from the current 7% within the year. This was disclosed by Lance Y. Gokongwei, JG Summit Holdings, Inc. president and chief operating officer. JG Summit is the parent of both Universal Robina and Robinsons Land. On Tuesday, the one-week trading suspension on Universal Robina shares was lifted. It closed 2.7% lower to P18 from P18.50 on Feb. 6. It opened at P17.75 and hit a high of P18.25. "I am happy with the reception, but I will be happier if five years from now it is higher than this. We are considering increasing the free float of Robinsons Land enough to generate the substantial free float and be part of the index again," Mr. Gokongwei told reporters. Universal Robina set the final offer price of its primary and secondary share sale at P17. Out of the 730 million shares on offer, 603.04 million shares and 31.74 million shares are allocated for international and domestic offers. Mr. Gokongwei said JG Summit will likely increase its free float "a few years from now but not immediately." "The main reason we took the re-offering for Universal Robina and Robinsons Land is to increase the free float. Because of limited free float, the share price is undervalued [and does not] reflect the growth prospects for either Robinsons Land and Universal Robina. It does not reflect share prices of JG Summit. With the successful re-offering of both Universal Robina and Robinsons Land, we will likewise experience a re-rating of JG Summit shares. We hope the two major subsidiaries will be re-rated by the market. Hopefully, it will give a boost to JG Summit," he said. Philippine Stock Exchange President Francis Ed. Lim lauded Universal Robina’s move to increase its free float. "Since its initial public offering in 1994, Universal Robina has grown and expanded to become one of the region’s biggest manufacturers of branded food products. Its growth, therefore, should serve as a beacon to closed corporations out there to follow the example of Universal Robina because there is no doubt the capital it pooled from its first offering helped the company build the financial muscle to compete in the region," he said. Universal Robina yesterday listed P10.8 billion of stocks of which P4.8 billion will represent fresh capital to replenish the company’s war chest for expansion. Leo Venezuela, an analyst from ATR-Kim Eng Securities, Inc., earlier said there is no further impact on the firm’s earnings per share and ownership dilution with the exercise of greenshoe option as it all consists of secondary shares. He recommended a buy on Universal Robina shares. "Universal Robina’s post-offer free float will increase further to around 40% from the original 36% foreseen. In our view, a further 12% increase in free float will make Universal Robina more liquid and hence make its intrinsic value more realizable. Our price target remains unchanged at P29.55 based on our DCF [discounted cash flow] calculation, suggesting a 60% upside. Even at its target price, Universal Robina will be trading at 18.7x 2006 earnings, comfortably within the range of its regional peers. Total shareholder return for the year is seen at 63.4% inclusive of the 3.4% dividend yield on an expected P0.62 cash dividend for the year. Going forward, we see Universal Robina’s growth drivers to be higher-margin branded consumer foods like candies, snacks, non-carbonated beverages as well as a turnaround in its China business this year due to rapid growth built around the Jack ’n Jill brand." 2tradeasia.com analyst Martin L. Espanol said Universal Robina is expected to reap fruits from regional operations within its branded consumer food products division and operations in Thailand, Malaysia, Indonesia, China, Hong Kong, Singapore, and Vietnam. ... as firm woos call centers to look at Lipa, Bacolod malls, The Gokongwei-controlled property developer Robinsons Land Corp. is near to leasing portion of its malls in Lipa City, Batangas and in Bacolod City in Western Visayas to two call center firms. Signing of the lease for the two sites is expected to happen within the next 30 days, Cornelio S. Mapa, Jr., general manager for commercial centers unit, told BusinessWorld in an interview. Mr. Mapa refused to disclose further details on the ongoing negotiation, citing requests of confidentiality from prospective locators. Robinsons Land has set aside at least 5,000-square meters in Robinsons Place-Lipa and Robinsons Place-Bacolod for office space. The two malls were already approved by the Philippine Economic Zone Authority as information technology zones, allowing future locators to secure government incentives such as income tax holiday and value-added tax exemption. Bacolod City already has one call center locator, I Asia, while there is no locator yet in Lipa City. When asked whether Robinsons Land will tap other existing malls for office space, Mr. Mapa said: "It is a probability, but at this point there is none yet." Developing call center facilities inside malls is fast becoming an option to more developers and call center operators because of the insufficient office space available in the metro and easy access to mall amenities for the agents. Already, Robinsons Land had opened to call centers two other malls -- Robinsons Big R Supercenter mall in Cainta, Rizal and Robinsons Place in Novaliches in Quezon City. Both facilities are being leased by US-based call center firm TeleTech Customer Care Management Phils. - Maricel E. Estavillo